There was a time not long ago when strategic discussions between global and Indian teams of beverages giants Coca-Cola and PepsiCo mostly centred on their arch rival.

There was a time not long ago when strategic discussions between global and Indian teams of beverages giants Coca-Cola and PepsiCo mostly centred on their arch rival.

NEW DELHI: There was a time not long ago when strategic discussions between global and Indian teams of beverages giants Coca-Cola and PepsiCo mostly centred on their arch rival. Not anymore. One major topic of such meetings nowadays is the increasing threat from small, local brands.

At least two-dozen regional aerated drinks makers, including Gujarat’s Hajoori & Sons, Alwar-based Jayanti Beverages, Delhi’s City Cola, Boss Beverages from Bareilly and Shri Brahm Shakti Prince Beverages of Delhi, are quietly stealing the thunder from the two multinational giants by selling quality products at least 20 per cent cheaper, mostly in small towns and rural areas. These ‘B-brands’ have together captured at least 10 per cent — their highest ever — of the Rs 14,000-crore aerated drinks industry in the country, said cola officials quoting researcher Nielsen’s data. And they are fast taking control of several pockets in the market.

Hajoori & Sons, maker of ‘Sosyo’ aerated drinks, for example, claims it has 29 per cent share in Gujarat while in Uttar Pradesh smaller brands have mopped up 22 per cent share this summer, according to bottling sources.

A spokesperson of market researcher Nielsen declined to confirm market share numbers of small brands.

Industry experts attribute the rising popularity of local brands to their deep penetration into the hinterland plus their low pricing due to low marketing spends as they deal directly with retailers. "As of now, we haven’t felt the need to have a star like, say, Deepika Padukone to advertise for us," said Mukesh Jain, sales head at Jayanti Group, which sells products under the ‘Jayanti’ brand.

"Pricing and taste is what is attracting consumers to us," said Mukesh Jain of Jayanti Group.

The firm, which claims to sell lakhs of bottles of Jayanti beverages every month in and around Alwar, has now spread its operations to Uttar Pradesh and Madhya Pradesh.

Beverages industry veterans say what started as a bubble is now a cause for concern for the two cola giants.

"We can no longer ignore these local brands. They are a huge threat and the companies are worried," said an official who works closely with Coca-Cola. Both Coca-Cola and PepsiCo chose to shrug off the competition from small players.

"While local food and beverage players in limited geographies try to compete on price, PepsiCo’s approach to winning is to connect better with consumers and bring relevant innovation to the category," said Vipul Prakash, vice-president for marketing at PepsiCo India.

A Coca-Cola India spokesperson said the smaller ‘B-brands’ accounted for just about 5 per cent share in the Indian sparkling beverages market with three key players — Coca-Cola, PepsiCo and Parle — controlling most of the market. "While we are aware of these players, we continue to focus on our strategy and plans," the spokesperson said.

FORCED TO CUT PRICES

But industry experts say competition from local brands has already forced Coca-Cola and PepsiCo to drop prices of colas in 200 ml glass bottles to Rs 10 from Rs 12 in markets such as Uttar Pradesh. The global players have also begun giving aggressive offers on two-litre PET bottles to protect their market shares.

"The multinationals have been forced to bring down prices of at least some sizes as the smaller brands are mopping up shares in small towns," a top industry official said.

But they are still not able to match the local rivals. AAP cola, for example, is selling 250 ml PET bottles at Rs 10. "The global brands can’t afford to drop prices beyond a point. They have to show profitability too to their parent firms," the official said.

"We have our own segment of consumers who love our brands. People have started appreciating the taste, image and service of Sosyo and Kashmira and our other brands from all parts of the country," said Abbas Hajoori, partner at Hajoori & Sons, which was founded in 1923.

PLAYING UP INDIAN ORIGIN

These players also drum up their India origin to win over consumers. If Hajoori & Sons uses themes such as ‘Apna Desh, Apna Drink’, then Jayanti Group on its website says, ‘Be Indian, Buy Indian’. AAP cola got noticed in February when it was distributed free at Aam Aadmi Party leader Arvind Kejriwal’s swearing in ceremony as Delhi chief minister at Ramlila Maidan. Its promoters, the Keswani family, have their origins in a paan shop in New Delhi called Prince Paan, started in the 1960s.

Delhi-based Rahul Beverages, selling City Cola in the city since 1995, and Campa Cola, and Bareilly-based Boss Beverages, selling soft drinks in five flavours of ‘cola’, ‘orange’, ‘limca’, ‘sprite’ and ‘dew’, are among other small brands increasing share in the market.

Industry insiders said even cricketer Virender Sehwag’s family is investing in a beverages factory in the North. Sehwag could not be reached for comment or confirmation. Global brand RC Cola, too, has made a quiet entry, selling in the north, east and Andhra Pradesh.

Presence of local drinks has been increasing in other markets such as China and sub-Saharan Africa as well. In China, beverages like Tingyi Holdings’ Master Kong and Hangzhou Wahaha Group are taking away share from Coca-Cola and PepsiCo’s fizzy and juice brands. Some experts, however, question the quality standards of local brands. "While these brands claim to follow quality standards, no one’s really checking," said an industry veteran, requesting not to be named.

But as of now, it looks like the combined clout of stars such as Salman Khan, Deepika Padukone and Kareena Kapoor isn’t enough to keep consumers from buying the Jayanti colas and Ginlim sodas.

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